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After eBay (Nasdaq:EBAY) launched in 1995, it would go on to be one of the fastest-growing companies in history. A key attraction was that it allowed millions of people to make money with ease. Great business model, huh?

But after the dot-com bust, the momentum slowed down. For example, there were some ill-fated acquisitions – like Skype – as well as bad investments.

To turn things around, eBay brought in a new CEO, John Donahoe, in 2008. All in all, it looks like things are working out. Over the past year, the shares are up a tidy 44.6%.

But are the changes long-lasting? Here’s a look at the pros and cons:

Pros

The payments business. There was definitely one acquisition that turned out extremely well: PayPal. If anything, the deal has really saved eBay. In the latest quarter, PayPal added more than 1 million accounts a month and grew the net total payment volume by 28% to $27.4 billion. As for the next quarter, the unit is expected to surpass 100 million active users.

PayPal is positioned nicely for several major trends, such as mobile commerce and the purchase of digital goods (such as for online games).

Innovation. eBay has been working hard to enhance its global platform. A key has been its highly successful mobile apps. Keep in mind that gross transaction revenue from this business is expected to reach $4 billion in 2011, up 100% over last year.

High-end ecommerce. For the most part, eBay has catered to smaller merchants. But this focus has been changing. Recently, the company agreed to shell out $2.4 billion for GSI Commerce, which builds sophisticated e-commerce platforms for large retailers. For eBay, this is a smart extension of its business and should provide more growth.

Cons

Competition. eBay faces tough competition for all its businesses. Perhaps the biggest threat is from Amazon.com (Nasdaq:AMZN), which continues to grow its business at a substantial rate. Amazon also is highly innovative, such as with its streaming service and cloud locker offering.

But there are also a growing number of early-stage companies. Just look at Groupon. The company has found tremendous growth in local e-commerce with its daily-deal business. Even Facebook has recently entered the space.

Costs. Traditionally, online businesses like eBay have low cost structures. After all, the technology can scale to millions of customers and transactions. Yet the cost advantage may be slipping, because of the need for technology infrastructure investments and top-notch talent. According to the latest earnings reports from Amazon and Google (Nasdaq:GOOG), there are already signs of these pressures.

Security. eBay has a huge amount of credit card information. Yet this makes the company a big target for hackers. Just look at the case with Sony (NYSE:SNE), which recently experienced two massive breaches of its user databases.

Auction business. This business continues to have good margins and tough barriers to entry. But it has matured. Thus, this will weigh down eBay’s faster-growing businesses.

Verdict

As seen in its latest quarter, eBay has a highly profitable business. Net income was $475.9 million.

While the company faces lots of competition, it should be a big beneficiary from the mobile commerce boom. The good news is that the company has been nimble in being a top player in the category.

When taking such factors into account, the pros outweigh the cons on the stock.